Beyond the constant carping about IT support outsourced to Bangalore, there's an untold story about a plethora of pickings for channel champions worldwide.
Some outsourcees require local partners in the countries where they work. Sometimes the outsourcees actually are those local partners. And some, of course, are the outsourcers.
Take a trip to OffshoreXperts.com. Yes, 20 IT outsourcing specialists on the main listings page are from India and 11 from neighbouring Pakistan. But also listed are three each from Romania, the USA, and Canada, and two each from Morocco, Russia, Argentina and Australia.
Also throwing their hats in the ring are OffshoreXperts.com's sole entrants from Singapore, Venezuela, Great Britain, Armenia, South Africa, New Zealand, Ukraine, and --- god help us all - Nigeria.
Outsourcing is a globalised, diverse phenomenon where the biggest limit is your imagination. IT resellers from everywhere are offering services globally to companies into outsourcing IT.
When you buy an IBM PC in Japan and call tech support, you're talking to Japanese speakers based in Brisbane.
Creative customised digital effects from Sydney-based Animal Logic have been seen in Hollywood blockbusters such as The Matrix and Lord of the Rings and boosting the impact of TV advertising for multinational names like Nike and Visa. They're not alone.
According to Austrade, Victoria-based software developer Pexim successfully provides full technical support -- alongside its own integrated platforms, communication protocols and applications -- to banks in the emerging Balkan nations of Serbia, Bosnia and Herzegovina, Macedonia and Montenegro.
Pexim's owners are Macedonian, which has been a crucial part of the software company's success. Emigrating to Australia in 1989 - the year the Iron Curtain clanged open on central and eastern Europe - Hristo Petreski used brother Mihail back home to build their contacts into a prosperous Australia-based IT business in Yugoslavia.
'Pexim Belgrade and Pexim in Macedonia grew rapidly and now the Pexim Group employs over 100 IT experts and has a total turnover over of US$7 million,' Petreski says.
'[But] unless you are seen as a solution provider with very strong local presence, you will not be trusted and, consequently remain with a marginal market share.'
Other local players agree. Harold Gibbs, managing director of Melbourne-based CostMedia, provides outsourced billing services to local and overseas companies in places like New Zealand and the United Kingdom. 'You need to establish a link overseas with someone,' he says.
Failing that, it can be years and a matter of chance before an offshore opportunity appears. While CostMedia always intended to provide services to overseas lands, it was years before the first offer arose.
'We were approached through Google, would you believe,' he says. 'And lo and behold, we got a contract offer out of the blue,' says Gibbs.
One thing led to another, and now CostMedia has several deals under negotiation. The service provider can't talk about them in detail yet, but things are definitely looking up, Gibbs says.
'There are two primary reasons, if they have already made a decision to outsource their billing function. Number one is cost. The Australian dollar is cheaper than European currency, especially the UK. The second is they've had some experience in outsourcing to India or other countries where language is an issue,' he says.
Many overseas companies already committed to outsourcing have had disappointing experiences with some of those nations. Australia might not be as cheap but it offered quality service at a very cost-effective rate, Gibbs says.
Four-year-old CostMedia has two arms to its strategy: telecommunications reporting for large corporates and a billing bureau. It is the billing bureau's services that are proving most saleable overseas. 'With the other, we're targeting very large corporates with long sales cycles. And I can't see that as something that would sell overseas,' Gibbs says.
He argues that too much competition likely already exists for providing such services to large overseas corporates. But the billing bureau targets the mid-market, and CostMedia has found few competitors in that niche overseas.
'Smaller companies are growing to the point where billing has become a problem for them,' Gibbs says.
Recent technological advances have made it possible for companies to outsource non-core competencies, such as billing, right around the world. CostMedia's application service provider-style operation uses Microsoft-based systems, such as SQL Server, to get a 'pretty close' integration with customer systems.
However, a trusting relationship between all parties is key. 'We know all their finances, although we're not involved in collections,' he adds.
Gibbs says billing is 'not really time-dependent' so it can be moved offshore with little fear of deadline pressures. However, a provider must be able to make changes to a customer's systems smoothly without bringing a business to its knees and show it's likely to stick around for the long haul, he says.
Experienced senior business executive David Evans is looking at offshoring opportunities from yet another angle. He is chief of an Australian startup that is building and operating outsourced contact centres in Fiji.
The new company, dubbed FoneXia, aims to take advantage of the boom in outsourced customer support by providing a politically stable alternative to low-cost offshoring giants such as India and the Philippines.
'Fiji offers an educated and customer-focused work force. The national language is English and the standard of spoken English in Fiji is superior to that of ... India and the Philippines,' Evans says.
Fiji is directly connected to the Southern Cross optic fibre cable linking Australia, New Zealand and the US west coast. FoneXia has already earned Fijian government support, including 'generous' tax incentives, he says.
FoneXia is on track to have 1300 seats operational around Fiji, in Suva, Nadi and Studio City, by its fifth year. 'All organisations require some degree of contact centre service,' Evans says.
'FoneXia is ideally positioned, in many ways, to equal and in some cases surpass service levels found in more traditional outsource countries such as India.'
Gary Ebeyan, CEO at Infosys Australia, says Indian giant Infosys is backing its global capability with local talent to boost its outsourcing game. But instead of simply partnering local providers, it bought one - Expert Information Systems.
'Former Expert has brought in staff with deep technical, consulting and project management skills as well as established client relationships,' he says.
Ebeyan says Infosys Australia has let Infosys engage with a broader customer base. 'Australian service providers are able to bring deep business knowledge, creativity, innovation and client relationship management [to these opportunities],' he says.
He concedes that India has emerged as the kingpin of IT outsourcing and BPO. However, even the USA remains a strong player, although it is being challenged by new entrants. 'Countries to watch in the future will be China and many east European countries,' Ebeyan says.
Outsourcing customers can be found across the world and increasingly so, as offshore and nearshore providers learn more about the higher end. 'More and more countries will join in,' Ebeyan says. 'There are probably too many to mention.'
Neo IT finds English-speaking companies that want to outsource IT are looking mainly at India, the Philippines, and to a lesser extent China and Russia. The US is beginning to favour Poland - but other former Eastern Bloc nations, such as Hungary and the Czech Republic, are hard on its heels.
Canada and Ireland are often used by the US as non-low cost offshoring alternatives, Neo IT says. So there's no reason Australia can't play a bigger part as a provider of IT services and BPO even to the US in time.
ACT-based Open Systems is one of dozens of Australian consultancies and system integrators doing good work abroad.
Mark Riley, managing director at Open Systems, says the Citrix reseller is doing well with ongoing deals in the Solomon Islands and Papua New Guinea. It also eventually expects to look further afield in the Asia-Pacific services-wise.
'We actually have some close association with Thailand. In this design and integration business, we really need to look locally in the Asia-Pacific,' he says.
Riley maintains that Australian providers' best chance is in less-developed nations - when it comes to providing integration and consultancy at least. The company's Solomon Islands and Papua projects are often foreign aid-funded, although Open Systems wins the deals in the usual way.
Open Systems has certainly had success in developed nations - such as the UK and NZ - but not from the services side. The company also exports off-the-shelf security appliances, he says.
The solution and service provider has had a similar experience to CostMedia in terms of the difficulty of marketing its services. Word of mouth is critical, and one deal leads to another.
Open Systems had its first call from a company in East Timor in October and is now exploring that opportunity, Riley says. Probably finding the right partners locally would be the biggest challenge,' Riley says. 'But [overseas business] has been good. No question about that.'
Craig Baty, group vice-president and research chief at Gartner, says Australia actually already exports more IT services than it imports. 'It's a little known fact ... that makes us quite unique on a global basis. So the whole offshoring phenomenon benefits the country as a whole,' he says.
India still has 80 to 95 percent of total offshore revenue. Only China comes close in potential, Baty argues.
However, leading Indian providers such as Infosys are being challenged by the likes of IBM, EDS and Accenture. Further, companies have started setting up their own in-sourced, captive centres of service provision overseas, especially for BPO. 'At least 29 countries are vying for a piece of the global delivery model pie, having seen the success India has had so far,' he says.
The market is maturing and more complex processes are getting offshored. Those require a more 'in-depth' understanding and knowledge. 'This is one area where Australia can capitalise,' Baty says.
Australia's cosmopolitan culture and language skills can attract multinationals seeking to set up data centres, BPO and disaster recovery in the Asia Pacific region. 'We also have an outstanding reputation in the provision of high quality facilities, and skills in financial services processing and support,' he says.
In short, Australian service and solution providers are definitely in the running for revenue especially as offshoring competition heats up.
A year or more ago, customers wanted specific custom application work, such as development or maintenance or management, and services buyers consistently turned to Indian firms, Baty says.
'As we look at the last six months, this has changed significantly. The shortlists now include a mixture of Australian, European, and North American external service providers as well as offshore companies from India, China and elsewhere,' Baty says.
Australia has a big advantage due to its political stability, with almost no civil unrest to speak of. The same cannot be said for many of the offshoring giants.
'The pendulum keeps swinging. The final result will be a set of global players rather than simply US or Indian or Chinese or, for that matter, Australian vendors,' Baty says.
In any case, something might have to slow India's run for the money soon.
In Bangalore, some 1422 IT firms are generating so much IT-related waste the city fully expects to drown under more than 1000 different toxic chemicals in coming years.
By 2020, the waste level is tipped to be ten times today's 1000 tonnes of plastics, 1000 tonnes of iron, 350 tonnes of copper, 300 tonnes of lead, 43 tonnes of nickel and 0.23 tonnes of mercury, plus barium, beryllium and cadmium.
Much of the waste is also 'outsourced' recycling from nations such as the US. The same scenario is repeated in Pakistan and China and probably elsewhere. Perhaps IT recycling may prove a future windfall for global IT outsourcing providers everywhere.
India - offshoring champion number one
Core skills: Application maintenance, development and packaged software implementation, contact centres and financial processing
IT services exports: US$9.5 billion; BPO exports: US$3.1 billion
Labour pool: Total expected to hit 10 million in next decade. About 75,000 IT graduates a year
Typical pay: IT staff get US$5000 to US$12,000 a year; business process outsourcing workers earn US$3500 to US$7500 annually
Strengths: English-speaking. Excellent educational system, strong government support. One policy recommends export profits for BPO projects go tax-free until 2009. 50/74 of the world's CMM level 5-certified companies are India-based.
Problems: India hosts the world's most highly militarised territorial dispute, with certain state borders vigorously disputed by China and Pakistan. Entrenched - but improving -- corruption.
Source: Neo IT (2003); CIA World Factbook 2004
Philippines - offshoring champion number two
Core skills: Call centres, high-end graphics, BPO, transcription services
IT services exports: US$300 million; BPO exports: US$600 million
Labour pool: Around 75,000 IT workers; about 15,000 IT graduates a year
Typical pay: IT salaries average US$5000 to US$10,000 a year. BPO pay is around US$3000 to US$8000
Strengths: Good government support for IT sector and English skills. Solid IT and telecommunications infrastructure - partly a legacy of the US military. Second most popular outsourcing destination for US companies after India. Strong university system.
Problems: Not enough project managers. Poor R&D investment. Crime. Civil unrest related to Islamist insurgency. Piracy. Territorial dispute over the Spratlys.
Source: Neo IT (2003); CIA World Factbook 2004
China - upcoming champion
Core skills: Low-end PC-based application maintenance, development, quality assurance testing and data processing. System integration.
IT services exports: US$700 million; BPO exports: US$210 million
Labour pool: About 200,000 IT workers; 50,000 IT graduates a year.
Typical pay: Programmers with two to three years' experience can get US$5500 to US$9000 a year.
Strengths: Government favours IT skills and exports. Plenty of foreign investment. Chinese companies spend more on IT than Indian companies. Software industry tipped to hit US$30 billion by 2005
Problems: Quality control. More Chinese are learning English, but at this stage there is still a language barrier. Government retains tight political control although market is freeing up. Infrastructure poor outside special economic zones.
Source: Neo IT (2003); CIA World Factbook 2004
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